Apple tweaks iPhone but not its game plan

Sept. 12, 2012

Updated Aug. 21, 2013 1:17 p.m.

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Mark Fitzgerald, an account manager for Incipio, takes a call as he watches the iPhone 5 roll-out. Employees gathered at the Irvine headquarters Wednesday to watch the launch of the Apple iPhone 5. Shortly after learning the new dimensions and features, the company was able to create a prototype on a 3D printer which they will use in creating cases for the phone. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Incipio CEO and founder Andy Fathollahi, right, watches an online presentation of the iPhone 5 roll-out. Incipio makes iPhone cases. "We hope to have our cases in select retail locations on the day of the phone release," he said. Beside him is Valentine Lopez, executive vice president. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Marissa Quarton, left and Katie Rychel, front right, and other employees of Incipio gathered at the Irvine offices Wednesday to watch the iPhone 5 roll-out. They were studying the dimensions and features of the phone so they could swiftly design and produce cases for the phone. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Shortly after watching the iPhone 5 announcement, designers at Incipio were able to use a 3D printing machine to create a prototype of proper dimensions that they could use in designing and producing cases for the phone. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Katie Rychel, a marketing manager, was among employees at Incipio to monitor the online Apple iPhone 5 announcement Wednesday. They were studying the dimensions and features of the phone so they could swiftly design and produce cases for it. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Employees gathered at the Irvine headquarters of Incipio Wednesday to watch the launch of the Apple iPhone 5. Shortly after learning the new dimensions and features, the company was able to create a prototype on a 3D printer which they will use in creating cases for the phone. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Incipio lead industrial designer Tim Hemesath marks a plastic block which will be put into a CNC mill to produce a prototype with dimensions of the new iPhone 5 so that the company can begin fabricating cases for it. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Marissa Quarton of Incipio uses an iPhone with a case produced by the company in Irvine. JEBB HARRIS, THE ORANGE COUNTY REGISTER

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Employees gathered at the Irvine headquarters of Incipio Wednesday to watch the launch of the Apple iPhone 5. Shortly after learning the new dimensions and features, the company was able to create a prototype on a 3D printer which they will use in creating cases for the phone. JEBB HARRIS, THE ORANGE COUNTY REGISTER

Mark Fitzgerald, an account manager for Incipio, takes a call as he watches the iPhone 5 roll-out. Employees gathered at the Irvine headquarters Wednesday to watch the launch of the Apple iPhone 5. Shortly after learning the new dimensions and features, the company was able to create a prototype on a 3D printer which they will use in creating cases for the phone.JEBB HARRIS, THE ORANGE COUNTY REGISTER

Little changed with the announcement of the iPhone 5 on Wednesday -- Apple still leads the mobile industry followed closely by a confederation of companies selling handsets with versions of Google's Android and a renewed Microsoft that remains a distant third when it comes to both consumer recognition and developer attention.

Apple's new iPhone debuted exactly as expected -- a larger 4 inch super high resolution screen on a thinner, lighter, taller design with faster 4G LTE speeds, a better camera and a new, smaller, dock connector. All features currently ship on competing handhelds, so why is Apple leading the industry?

The iPhone has emerged as a sort of benchmark for integrated, packaged design. The playbook Apple pulled from Wednesday was the same one it has used for the past five years. The company spends all year developing a new device, moves older versions to lower price points and releases the new one at the same $200 price point that allows Apple to make a killing from carriers subsidizing the cost to get you on contract for two years. When Apple shows off a new iPhone each year it's saying, effectively -- "this is the stuff we can put together to make the best package."

No such guarantee comes from rivals pushing the competing Android handsets. If a new chip debuts capable of super fast 4G LTE speeds, for example, it'll find its way into one of the new Android phones debuting that month. Nevermind if the chip drains power so quickly it leaves you with an expensive brick by mid-day. For good or bad, Android phones get new technology first, come in every size there is and are more customizable (to the point where the phone can be broken) by the user. However, these phones will be replaced by something new and better just a few months into a two year contract.

"There are dozens of Android choices and they're not hand me down models," said Mike Gikas, senior electronics editor at Consumer Reports. "Android will have the advantage of finding the perfect model for someone."

And what of Microsoft, a company that went from worldwide software powerhouse to dark horse of the mobile market in just five years? Nokia debuted the Lumia 900 with the latest version of Microsoft's software earlier this year to some acclaim but it faced a chicken-and-egg problem that persists today – how do you get users on a device without lots of great apps? And how do you get developers to build great apps for a device without any users? Now the follow-up Lumia 920 is expected to launch before the end of the year with a new version of Microsoft's software, but will things be any different?

"Microsoft has proven to be fickle in cases. There are a lot of 'ifs' with Windows. It's a game that's going to require a commitment of more than just a few months" said Gikas, who pointed to Microsoft's recently abandoned iPod-like Zune players and the shortest-lived phone in recent memory, the Kin, as examples. "As intriguing as Windows Phones are now, they may not be part of the real big decisions people will make."

Android and Microsoft aren't the only players, but they may be the only players to have any impact on Apple's momentum this year. Blackberry has a new software platform and set of devices planned but they won't debut till after the critical holiday season. Amazon has yet to debut a phone but it's slowly headed in that direction. The company offers an app store for Android that works as an alternative to Google's and on Amazon's growing line of tablets it's the only option. When combined with its line of e-Readers, there's a Kindle (some with ads and some with cellular connectivity) at virtually every price point between $70 and $500.

Going forward, keep an eye on how the business models of these companies shift in the face of competition. Microsoft licenses its software to manufacturers. Each device sold is money in the bank for the manufacturer and Microsoft. Google gives the Android software away in hopes of attracting as many eyeballs as they can for future advertising revenue. Apple, too, has secured such massive economies of scale and hardware margins that it can afford to give software away. And then there's Amazon, playing a game somewhere in between.

Can they all find a way to make money? That's still as unknown as the features of the iPhone 6.

Correction: A previous version of this article incorrectly spelled Mike Gikas.

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